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BANGKOK, Jan 12 (Reuters) – The Thai government plans to buy up to 100,000 tonnes of rubber from the market this year and keep it in stocks in order to shore up prices, agriculture ministry sources and industry officials said on Monday.
“We will submit for cabinet approval tomorrow the plan to buy rubber from farmers through the channel of agricultural cooperative networks across the country,” a senior agriculture ministry official told Reuters.
“We would need to spend around 4 billion baht ($115 million) from the government budget for this scheme,” said another ministry official, who asked not to be named. This is a Thai initiative to support rubber farmers, separate from the latest attempt by rubber-producing countries to prop up world rubber prices, he said.
The world’s top three rubber-producing countries — Thailand, Indonesia and Malaysia — agreed on Dec. 13 to cut their 2009 rubber exports by a sixth, or 915,000 tonnes, to prop up prices. [nJAK424464]
The government will offer soft loans to the Rubber Growers Cooperative Federation of Thailand, which has 675 offices around the country, to buy rubber from farmers and keep it in its stocks, according to the plan.
The government would not fix the price at which the rubber would be bought from farmers, but would buy at prevailing market levels, anticipating that this would push prices up gradually.
“We would buy at the market price and keep it in stocks, waiting to sell when the market prices rise so that we can make a profit from that,” said Jirakorn Kosaisawe, deputy chief of the Department of Agriculture.
The chairman of the Rubber Growers Cooperative Federation of Thailand said farmers would be happy if the price of unsmoked sheet (USS3) stayed above 40 baht per kg.
“I think a price for USS3 of around 40 baht is resonable, a level that farmers would not make a loss at,” said Perk Lertwangpong, chairman of the federation.
USS3 unsmoked sheet, a raw material grade for export rubber sheet, was at 45 baht per kg on Monday.
Thailand, the world’s biggest rubber exporter, accounting for around 33 percent of the global rubber trade, sold 2.9 million tonnes in 2007, slightly down from 3.0 million tonnes in 2006, according to the Commerce Ministry.
In 2008, Thailand was forecast to ship 2.7 million tonnes, according to Thai Rubber Association data. ($1=34.81 baht)
Source: Reuters